Enterprise Research Centre’s Roundtable event: Closing the Research Gap on Micro Businesses with 1-4 Employees
- by @inc
- 18-06-2025
A Critical Step for UK Productivity and Economic Growth.
MENTA’s CEO Alex Till presented at the Enterprise Research Centre’s roundtable event at the University of Warwick’s Business School’s campus at The Shard, London.
Micro businesses employing between 1 and 4 people represent the most prevalent segment within the UK’s business landscape. These small-scale enterprises form the backbone of local economies, particularly in sectors ranging from skilled trades and personal services to creative industries and professional services. Their sheer numbers and economic contribution make them vital players in the UK’s productivity agenda — yet they remain critically under-researched and under-supported.
The Predominance of 1-4 Employee Micro Businesses
Data from 2024 reveals that a significant majority of UK micro businesses fall within the 1 to 4 employee range, making this cohort a fundamental component of the national economy. This predominance reflects a landscape dominated by sole traders, family-run businesses, and micro enterprises that provide bespoke, flexible, and community-focused services.
Despite their outsized role in employment and economic activity—representing millions of jobs and considerable economic output—these businesses are often invisible in mainstream economic surveys and policy discussions. This invisibility creates a blind spot for policymakers and support providers alike, hampering efforts to design tailored interventions that could unlock their growth and productivity potential.
The UK’s Lagging Position Compared to Europe and Scandinavia
When benchmarked against other advanced economies, particularly within Europe and Scandinavia, the UK is falling behind in comprehensive research and data collection on micro businesses, especially those with fewer than 5 employees. Countries like Sweden, Denmark, and the Netherlands have invested in longitudinal surveys and microbusiness-specific data sets, enabling a much richer understanding of:
- Future trends shaping small enterprise sectors
- Productivity drivers and barriers unique to very small businesses
- Integration into wider supply chains and local economic ecosystems
- Skills gaps and workforce development aligned with emerging industry needs
This advanced research capability allows these countries to formulate forward-looking policies that not only support micro business survival but actively promote scaling and innovation, directly contributing to national productivity growth.
National and Regional Integration: Reflecting Diverse Local Realities
It is paramount that research and policy frameworks for micro businesses are designed to operate effectively at both the national and regional levels. The diversity of micro business environments across the UK — from rural and coastal communities to urban centres — means that trends, challenges, and opportunities can differ substantially.
Understanding these local and regional nuances is crucial for:
- Tailoring business support and growth services to meet specific local needs
- Addressing rural and coastal economic development challenges, such as infrastructure and connectivity gaps
- Supporting urban micro businesses facing issues related to space, competition, and digital transformation
- Enhancing regional supply chain linkages and local labour markets
This regional perspective is especially important as the UK government prepares to launch the Small Business Growth Service in the coming months. The success of this national service will depend on its ability to deliver targeted support that recognises and responds to the distinct characteristics and priorities of micro businesses across different geographies.
Regional Case Studies: Insights into Micro Business Realities
Rural Localities: Norfolk and Suffolk Micro Business Networks
Rural micro businesses often face challenges related to digital connectivity and access to wider markets. For example, micro businesses in Norfolk and Suffolk, such as bespoke craft producers and small-scale agricultural service providers, require targeted digital skills development and stronger supply chain links to larger regional and national buyers. Support programs tailored to overcoming rural isolation and infrastructure gaps can significantly boost productivity and sustainability.
Coastal Communities: Cornwall and East Sussex Creative and Tourism Micro Businesses
In coastal towns like those in Cornwall and East Sussex, micro businesses with 1-4 employees frequently operate within tourism, hospitality, and creative sectors. These businesses experience strong seasonal fluctuations impacting cash flow and workforce stability. Research focusing on resilience strategies, access to finance during off-peak periods, and skill development in digital marketing could greatly enhance their growth prospects and integration into regional economic plans.
Urban Centres: Greater Manchester and London Micro Service Providers
Urban micro businesses, including hairdressers, mechanics, and professional services in Greater Manchester and London, grapple with high rental costs, fierce competition, and rapidly evolving customer expectations influenced by digital innovation. Understanding these pressures and investing in data-driven support that includes workspace affordability, digital upskilling, and local networking platforms is key to unlocking their productivity gains and long-term viability.
Why Addressing This Gap Matters for UK PLC
The UK government’s productivity agenda—a key pillar of economic strategy—depends heavily on unlocking the potential of all business sizes, including micro businesses with 1-4 employees. These firms often serve as vital suppliers and innovators within regional supply chains, especially in sectors where bespoke skills and local knowledge are paramount.
Without robust research and targeted policy informed by accurate data, several risks arise:
- Misaligned business support programs that fail to meet microbusiness needs
- Lost opportunities for integrating micro firms into digital and green supply chains
- Workforce development programs disconnected from the reality of microbusiness skill needs
- Weaknesses in economic resilience and regional growth driven by underperformance of these critical businesses
The Enterprise Research Centre Roundtable: Pathway to Progress
The Enterprise Research Centre (ERC), in collaboration with the National Enterprise Network (NEN), convened a key roundtable at Warwick Business School’s campus at The Shard to spotlight these urgent research gaps. The roundtable convened stakeholders across policy, academia, and business support to:
- Identify priority knowledge gaps in microbusiness research focused on 1-4 employee enterprises
- Explore the value of a dedicated survey instrument tailored specifically to micro businesses
- Discuss collaboration opportunities to develop future data sets and trend analysis that support economic growth and supply chain integration
- Consider how research insights can inform education and skills programs, particularly in preparing future micro business owners and their employees
- Emphasize the importance of regional data and policy approaches aligned with the forthcoming Small Business Growth Service
Next Steps and Call to Action
The ERC and NEN will spearhead efforts to develop a dedicated, comprehensive micro business survey aligned with the unique realities of UK micro enterprises. This initiative aims to bridge the knowledge gap, provide actionable insights for policymakers, and enhance the UK’s competitive position on the global stage.
To build a more productive and resilient UK economy, it is essential that:
- Micro businesses with 1-4 employees receive focused research attention
- Policy and support programs reflect the nuanced needs of this dominant cohort at both national and regional levels
- Future workforce development integrates pre-industry skills tailored to microbusiness realities
- Data-driven insights foster deeper supply chain integration and innovation
Get Involved
If you represent a micro business, business support organisation, policymaker, or researcher with a vested interest in UK micro enterprises, your participation is crucial. Together, we can shape a research agenda that ensures micro businesses are visible, valued, and equipped to thrive within the UK’s productivity framework.